One cost-cutting measure for which the U.S. Postal Service is fighting is a five-day mail-delivery week that, as mail volumes continues to decline, could help to curtail a $238 billion shortfall projected over the next decade.
However, the U.S. House of Representatives Appropriations Committee voted to block USPS’ request to eliminate delivery on Saturdays, which the USPS deems to have the lowest mail volume. Unrelated, but showcasing the organization’s dire financial situation, the USPS is moving forward with facility consolidations, reductions and possible layoffs if enough employees do not accept the organization’s early retirement offer.
In its most recent quarter, the USPS sustained its 20th loss in the past 22 quarters. The second quarter (Jan. 1 to March 31) of this fiscal year resulted in a net loss of $1.9 billion.
“The Postal Service is working diligently to improve its finances by streamlining our network to improve efficiency, reduce operating costs and increase revenue, which was up $379 million over the same period last year—the third straight quarter of revenue increase,” Patrick Donahoe, USPS Postmaster General and CEO, said in May. “Despite aggressive cost-cutting actions, however, we will still incur annual inflationary cost increases of approximately $1.2 billion each year, and First-Class Mail volume continues to decline.”
In a plan to reduce costs and save rural post offices, the USPS continues its process to reduce hours at more than 9,000 facilities by September. Last fall the USPS avoided layoffs by offering more than 15,000 employees early retirement, according to Government Executive. Now the organization is providing a similar offer to 3,000 workers, Government Executive reported last week. Last time around workers did not receive financial compensation for retiring ahead of schedule, only early eligibility to their retirement annuity. Those who accept early retirement now will receive $10,000.
To get early retirement and the $10,000, qualified workers must accept the offer by Aug. 18 and leave the company by Sept. 30, Government Executive indicated. Those who decline may seek a new assignment at a different post office, but some workers may be laid off if 3,000 eligible workers do not accept early retirement or reassignment. If necessary, layoff notices will be sent by mid-October, with separation taking effect by Jan. 9, 2015. If an employee fails to accept early retirement, opt for reassignment or resign, that employee will be laid off, the USPS told Government Executive.
Another plan initiated in 2012 to reduce costs, the USPS Network Rationalization plan will resume next year. The plan calls for the closure of processing facilities that originally were set for February, but were pushed back for undisclosed reasons, according to Government Executive at the time of the delay. The USPS now indicates it wanted to ensure efficient operations moving into phase two, according to its website.
In 2012 and 2013, 141 processing centers were closed, and 82 more are scheduled for the second round, according to the USPS in a letter to customers last week. The first phase resulted in $865 million in savings with “negligible service impacts” and no employee layoffs. The second phase is expected to save an additional $750 million annually and be completed by the fall of 2015.
USPS informed the union of its intent to conduct feasibility studies at 242 of its mail-processing sites in 2011 and concluded it would consolidate 225 of those in 2012, Allen Mohl, USPS contract administration manager, said in a letter sent last week to John F. Hegarty, National Postal Mail Handlers Union president.
“It is projected that these consolidations will result in significant savings for the Postal Service,” Mohl said. “Some affected career employees may be reassigned to other vacant positions. Reassignments will be made in accordance with article 12 of the collective bargaining agreement.”
All but 13 states are affected by the 82 closures, with Indiana having five closures, and California, Minnesota, North Carolina, Ohio, Texas and Wisconsin having four closures. Closed facilities typically are consolidated with another in-state facility but some will cross state lines.
Visit the USPS website to see a full list of proposed facility consolidations and hour reductions.
